A potential no-deal Brexit could have an impact similar to that of Lehman Brothers bankruptcy in 2008, which contributed to the 2007-2008 global financial crisis, Chairman of Societe Generale Lorenzo Bini Smaghi explained.

“We have several risks in the global economy. I think the biggest risk in the short term is Brexit because it is very difficult to forecast what will be the channel of transition to the world economy. And the psychological impact on the basement, on sentiment, could be very strong, and the transmission to the financial market can also be very devastating as we saw, for instance, with Lehman Brothers in 2008. So this is something that we have to monitor very closely”, the Societe Generale chairman said.

When asked whether the psychological impact of a no-deal Brexit could really be comparable to the Lehman Brothers bankruptcy, Bini Smaghi said that the televised consequences of the 2008 downfall impacted investors’ mood, and the same could happen with Brexit.

“It’s very difficult to forecast. If you remember the images on television of people losing their jobs, queuing at the banks, this really had an impact on investors’ sentiments and market perception. If we have something similar in the UK, difficulties in people travelling or people finding products in shops … this, with today’s global media, would have an impact on the global economy, which might have an effect on the real economy and also on the financial sector”, the economist said.

Regarding any additional preparations of Societe Generale for a potential no-deal Brexit, the chairman of the banking group said, “We have people in London and we have people on the continent, so we have the flexibility to adapt quite rapidly.”

“So we are waiting to see what the outcome will be. Because [it is] not only the issue of Brexit, but what kind of agreements there will be between the two after, and how much can we do from London, how much can we do from Paris, and finally also, what is the whole investment banking business, trading business — what is the future of that”, Bini Smaghi said.

Lehman Brothers, one of the largest investment banks in the United States, filed for bankruptcy in September 2008, which caused the Dow Jones Industrial Average to plummet 4.5 percent in one day.

UK PM Boris Johnson repeatedly stressed he would deliver Brexit before 31 October deadline – with, or without a deal. He even ordered a prorogation of Parliament until 14 October to secure all options, however, the opposition Labour Party and some conservative MPs adopted a bill that prevents the country from leaving the EU without an agreement with Brussels.